Market Update: U.S. Stocks Fall as Trump Administration Plans New Tariffs on Chinese Goods
U.S. stocks declined sharply Wednesday, snapping a four-day winning streak, as investors recoiled on news that the Trump administration plans to implement additional levies on $200 billion in Chinese goods.
Stocks Turn Lower
All of Wall Street’s major indexes headed for firm losses, with the Dow and S&P 500 snapping their streaks of four consecutive gains.
Dow industrials fell 219.21 points, or 0.9%, to close at 24,700.45. Caterpillar Inc. (CAT), Chevron Corp (CVX) and DowDuPont (DWDP) were among the biggest losers for the day.
The broader S&P 500 Index fell 0.7% to 2,774.02, with ten of 11 primary sectors registering losses. Shares of materials companies and energy producers were he biggest laggards.
Meanwhile, the technology-driven Nasdaq Composite Index closed 0.6% lower at 7,716.61.
The CBOE Volatility Index, also known as the VIX, rose after four consecutive declines. The so-called “fear index” tacked on 7.9% to close at 13.64.
China “Shocked” by U.S. Tariff Plan
President Trump’s plan to implement new levies on Chinese imports has left Beijing in a bind, forcing it to retaliate in ways that could undermine its long-standing commitment to free trade.
In a statement issued Wednesday, China’s Commerce Department said Beijing is “shocked” by the new policy and that China “has no choice but to take necessary countermeasures.” It did not elaborate on what countermeasures are being proposed.
Washington’s proposed measures are far-reaching and severe; in addition to the 25% levies imposed last week, the Trump administration will clamp 10% duties on an additional $200 billion in Chinese goods. That means up to $250 billion in Chinese imports will be subject to tariffs.
While Beijing has matched U.S. tariffs dollar for dollar, it will be unable to do so for much longer given its exorbitant surplus with the world’s largest economy. According to The Wall Street Journal, the mood behind the scenes is much more somber with Chinese officials concerned about how far to retaliate without hurting national interests.
Crypto Recovery Falls Short
The cryptocurrency market was unable to make progress Wednesday, as bitcoin and the major altcoins traded in a tepid range.
The market capitalization of all cryptocurrencies is currently holding at $251.5 billion, according to CoinMarketCap. Total coin values bottomed at $248.7 billion, the lowest in almost two weeks.
Bitcoin prices held steady above $6,400 – a level that had previously capped short-term rally attempts. Bitcoin attempted a bullish breakout over the weekend as prices crossed $6,800.
Ethereum, bitcoin cash and Ripple XRP were little changed in a session marked by lateral moves. At one point, Litecoin was up more than 7% before halving gains later in the session. It was last seen trading around $78, where it was little changed.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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